Stock Market Update

Stock Market

The U.S. stock market has shown resilience, with the S&P 500 and Nasdaq reaching record highs recently, driven by robust consumer spending and strong corporate earnings. Despite tariff-related uncertainties, sectors like energy and industrials have offset risk-off sentiment, keeping markets near peak levels. Notable performers include tech stocks, with Nvidia rallying due to AI optimism, and banks like American Express and Charles Schwab, which reported strong earnings from dealmaking and trading activity. However, concerns linger about potential volatility due to trade policies and Federal Reserve actions. For instance, J.P. Morgan analysts predict range-bound equity markets (S&P 500 between 5,200 and 5,800) unless broad trade agreements reduce volatility.

Economy

The U.S. economy remains a global powerhouse with a GDP exceeding $25 trillion, driven by innovation in tech, finance, and clean energy. Recent data shows mixed signals: payrolls increased by 147,000 in June, surpassing expectations, indicating labor market strength, though hiring cooled slightly in May (139,000 jobs added, unemployment at 4.2%). Inflation rose 0.1% in May, less than anticipated, but June’s wholesale inflation remained flat, easing fears of tariff-driven price spikes. However, business sentiment is declining, with the February flash services PMI slipping below 50, signaling deteriorating confidence, potentially due to tariff uncertainties. J.P. Morgan Research warns of a sentiment shock that could push the economy toward recession if spending and hiring weaken further.

Cryptocurrency Legislation

The U.S. House passed the “Genius Act” stablecoin bill and a crypto market structure bill, marking significant progress for the digital asset industry. These bills, backed by the crypto sector and top Republicans, are expected to be signed into law by President Trump. The legislation aims to create a regulatory framework for U.S.-dollar-pegged stablecoins, boosting investor confidence. This follows a surge in crypto market capitalization to over $4 trillion, driven by Bitcoin and Ethereum ETF inflows. Major banks are reportedly planning to launch stablecoins, anticipating a more crypto-friendly regulatory environment under the Trump administration. However, a nine-hour standoff with conservative lawmakers delayed progress, highlighting political tensions.

Tariffs and Trade

President Trump’s trade policies continue to dominate headlines. New tariffs, ranging from 20% to 50%, were announced on over 20 countries, set to begin August 1 unless trade deals are reached. This follows a 90-day tariff pause expiring July 9. Specific actions include 35% tariffs on Canada and 30% on Mexico and the EU, raising concerns about price increases for electronics, appliances, and other goods. Economists, such as Ernie Tedeschi from Yale’s Budget Lab, note that these tariffs disproportionately affect lower-income households’ purchasing preferences. The EU has delayed retaliatory tariffs, and a U.S. Treasury official expressed optimism about a potential tariff deal with Japan to ease tensions. J.P. Morgan Research highlights risks of stagflation—slower growth with higher inflation—complicating the Federal Reserve’s dual mandate of employment and price stability.

Federal Reserve

Tensions between President Trump and Federal Reserve Chair Jerome Powell have escalated, with Trump criticizing Powell over the Fed’s $2.5 billion headquarters renovation and interest rate policies. Trump’s reported plan to remove Powell has sparked fears of market instability, as investors worry about the Fed’s independence. Senator Elizabeth Warren warned that firing Powell could “crash” markets. Fed official Christopher Waller, a potential Powell replacement, has pushed for an immediate rate cut, citing transitory tariff-related inflation, while Powell emphasized anchoring long-term inflation. J.P. Morgan analysts expect the Fed to hold rates (currently near 4.3%) until September, with cuts possibly resuming in 2026, targeting 3%–3.5% as inflation moderates (PCE inflation at 2.3%, above the 2% target).

Corporate Updates

Several corporate developments have made waves:

United Airlines reported strong demand, forecasting a robust 2025, bolstered by consumer travel trends.
Amazon’s AWS unit cut jobs as part of ongoing layoffs, reflecting cost-cutting in tech.
Chevron finalized a $53 billion acquisition of Hess Corporation, securing oil assets in Guyana after winning arbitration against Exxon.
Netflix posted a 45% profit jump in Q2 2025, driven by subscriber growth and AI-enhanced advertising.
JPMorgan reported a Q2 profit of $14.2 billion, beating Wall Street expectations despite a decline from prior quarters.
Elevance Health’s shares fell after a weak profit outlook due to rising Medicaid and ACA costs.
GrabAGun Digital Holdings, backed by Donald Trump Jr., debuted on the NYSE with the ticker “PEW.”
Meta settled an $8 billion shareholder lawsuit over Facebook privacy issues while restructuring its AI division.

Real Estate and Housing

The U.S. housing market faces challenges, with homebuilders cutting prices at the highest rate in three years due to high mortgage rates and economic uncertainty. The NAHB housing market index fell from 47 to 42 in February, reflecting declining builder sentiment. International investors are capitalizing on weak demand, with over 50% of purchases made in cash to bypass high rates, sidelining American buyers. Redfin’s chief economist noted a surprisingly cool summer housing market, with buyers waiting for rate cuts. Mauricio Umansky, CEO of The Agency, stated that housing prices are unlikely to decline soon.

Public Broadcasting Cuts

The House approved the Trump administration’s DOGE spending cuts package (216-213), slashing $9 billion in previously approved funding for public broadcasting (PBS, NPR) and foreign aid. The Senate passed it 51-48, and it awaits President Trump’s signature. Station leaders warn that these cuts will be “devastating” for rural areas, threatening scores of public TV and radio stations. Bill Siemering, a public broadcasting figure, called the cuts a risk to a “unique, invaluable cultural resource.” This reflects a broader shift in federal budget priorities under Trump.

Additional Context

Legislative Impact: The One Big Beautiful Bill Act (OBBBA), signed on July 4, extends the 2017 Tax Cuts and Jobs Act, offering deductions for tips, overtime, and Social Security, and raising the SALT deduction to $40,000. However, its economic stimulus is limited as tax relief primarily benefits higher-income households less likely to spend.
Global Implications: Tariff policies and Fed decisions are influencing global markets, with U.S. trade actions prompting responses from the EU, Japan, and others. The G20 is nearing a trade consensus despite U.S. tariff tensions.